Piketty’s Africa: Are the Poor and Rich Worlds Converging?

This post asks what the blockbuster, selling out and dominating the displays of academic bookstores, by Thomas Piketty  Capital in the Twenty-First Century, translated by Arthur Goldhammer (Belknap Press of Harvard University Press, 2014) can tell us about Africa’s economic history from the 18th century to the present or about Africa’s future in the world economy.

Piketty’s work, which Paul Krugman has praised, writing “this is a book that will change both the way we think about society and the way we do economics,” is at the moment embroiled in a debate sparked by Chris Giles of the Financial Times about the accuracy of his data analysis.

The central conclusion of Piketty’s book, summed up on page 571 of his 685 page magnum opus is as follows:

“The overall conclusion of this study is that a market economy based on private property, if left to itself, contains powerful forces of convergence, associated in particular with the diffusion of knowledge and skills; but it also contains powerful forces of divergence, which are potentially threatening to democratic societies and to the values of social justice on which they are based.

The principle destablizing force has to do with the fact that the private rate of return on capital, r, can be significantly higher for long periods of time than the rate of growth of income and output, g.” (Piketty, Capital, 571)

Significant attention and debate has recently been placed on Piketty’s conclusion that “that wealth inequality in the rich world is going back to levels last reached 100 years ago,” however much less attention has been paid to two other findings located within Piketty’s work.  The first of these findings is that growth rates among the rich countries (defined by Piketty as the United States and Canada, the countries of Western Europe and Japan) have largely converged since the 1970s.  The second conclusion is that government policy decisions have had very little impact on overall growth rates, especially for countries located at what Piketty calls the World Technological Frontier. In this post, I will mostly be interested in investigating the the implications of this convergence between the growth rates of different countries; rather than growing inequality within specific countries.  In addition, although Piketty’s work is undoubtedly about the rich world, Africa, even more than the rich Gulf states, haunts the pages of this work, a shadowy alternative to the processes taking place in the stars of Piketty’s drama France, Britain, Germany and the United States, with supporting roles played by Sweden and Japan.

There is currently a renewed interest in African economic history, spearheaded both by young scholars such as Morten Jerven, author of Poor Numbers and recently Economic Growth and Measurement Reconsidered in Botswana, Kenya, Tanzania, and Zambia, 1965-1995.  The need to rewrite the economic history of the independence period in Africa has also recently been highlighted by the historian Frederick Cooper in his recent work Africa in the World: Capitalism, Empire, Nation-State (2014).

The rest of this post will be devoted to attempting to uncovering exactly what Piketty is saying about Africa in particular and the emerging world in general. After reveiwing the the passages that dealt with Africa or the convergence between developing countries and rich countries, four broad conclusions can be reached by reading Piketty:

  1. The end of Europe’s political domination over Africa, Asia and Latin America in the mid-20th century led to a partial convergence between the economic fortunes of these three regions, particularly because unequal transfers of wealth have largely ended.
  2. The one exception to this general trend is the region of Sub-Saharan Africa, which continues to have a large share of its national income owned by foreigners, even as it owns relatively little of the rest of the world.
  3. There is significant divergence in the capabilities of states in the emerging economies.  States such as China are able to capture around 30% of national income in taxes and government revenue, historically a number associated with the creation of the modern social state.  On the other hand, India and many countries in Sub-Saharan Africa are only able to capture around 10-15% of national income in taxes, a number that historically means that the state can only perform the basic functions of national security and law and order, but that it is incapable of providing adequate education or healthcare.
  4. Finally, because the convergence in the income of poor and rich countries is based on knowledge transfer and implementation, we are likely to see a growing divergence within the emerging economies between those countries that adequately invest in health and education and those countries that cannot afford to invest at similar rates.

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Networks and Superpowers

I was inspired to write this post yesterday, when I read the notice that Immanuel Wallerstein was retiring once again.   This time he is retiring from Yale, from where he has been faithfully posting commentaries about world affairs, month after month with a consistency to which I can only aspire.  After all, Wallerstein is currently on blogpost number 373.

In part my absence from blogging can be ascribed to personal factors, I have begun teaching at the University of Pennsylvania, and I have recently been offered my first tenure track job.  In the near future, I may also become director of an Africana Studies Program.  Besides, possessed of what might only be termed academic ADHD, I have also been adding new projects to my list of responsibilities with reckless speed.   However, when one compares oneself, comparisons are truly impossible, with a scholar as prolific as Immanuel Wallerstein such complaints can only sound silly.

Yet, recent events have made it appear appropriate to take stock of where the international order is heading at the moment.  The 373rd commentary from Wallerstein paints a picture of the United States and Iran locked in a lose/lose conflict, while the recent article by the FT’s Middle East correspondent Borzou Daragahi on Syria only highlights the extent to which that conflict has become intractable.  Putin’s walk into Crimea and the fractioning of the Gulf Cooperation Community, marked by the withdrawal of Saudi and the UAE’s ambassadors from Qatar are also further manifestations that the Obama administration either lacks the will or the ability to marshall its own or its allies power to solve the complex geopolitical problems confronting the world today.

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Iran, the Power of Weakness, and a New Middle East Architecture

There is a chance that Obama/Kerry are engaging in a momentous series of decisions at the moment, decisions that may finally allow the US to be a positive force in re-imagining the international relations of the Middle East after colonialism and the Cold War.  The Geneva talks which concluded last weekend are a significant step in bringing about a new architecture of power and interstate relations in a region whose structures are wearing thin.

As Kenneth Pollack has recently commented the major breakthrough in the talks in Geneva between Iran and P+1 is not so much the resolution of the Iranian nuclear issue, but the building of confidence between the various parties.  Confidence which may eventually lead to Iran being brought “in from the cold.”

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Searching for a Turning Point in Contemporary History

In the United States, and much of Western Europe, the 1990s have often been remembered as a decade of triumphant stability, while the expected somnolence of the 2000s too often appeared marred by crises and upheaval. Consequentially, there has been a lot of handwringing amongst historians of the recent past and other political and social prognosticators searching for the moment of change. Questions about whether or not there was a tipping point, when it occurred, and what the transition from stability to instability consisted of, continue to plague writers looking at the last two decades. Yet a partial answer to questions about the location and nature of the point of inflection between stability and instability after the Cold War begins to emerge in Daniel Yergin’s latest book, The Quest.

The Quest for All-encompassing Theories

Enshrouded in the fog of the present, observers turned to competing theories about the nature of great politics within the labyrinth of international relations, to define the sources and to prognosticate the longevity of Western ascendency at the end of the Cold War. Arguments about the durability of the Pax Americana and the triumph of liberal democracies in general were initially framed as a contest of ideas between the triumphalism of Francis Fukayama, best articulated in his 1992 book The End of History and the Last Man, and his fierce debate with his critics from within the political science community, Samuel Huntington and John Mearsheimer. [1] On the one hand, Fukayama argued that the success of an alliance of liberal democracies, which emerged out of the wreckage of the Second World War, in their decade long struggle with Communism showed decisively that a fundamental truth of human nature was the quest for freedom and the realization of respect for the individual, and that these values could best, and perhaps only be actualized in capitalist, liberal democracies. One of the core implications of Fukayama’s argument was that the very human quest for self-realization would inevitably compel individuals, and consequentially whole societies, to build liberal democratic states, which shared a universal set of core values out of which a new harmonious and cooperative international order could be constructed. [2]

http://www.booksandideas.net/Energy-a-Lens-on-World-Politics.html?lang=fr

Bluster or War: Interpreting the Escalating Sudan-South Sudan Conflict

By Alden Young

Looking at events since January 2012, it has at times been hard to tell if we are witnessing a simple pricing dispute or a total divorce between the newest neighbors in northeast Africa.

There is some truth to Alex De Waal’s recent statement at the Royal Africa Society that “it all looked so good just over a year ago.”[1] A year ago there was a euphoria of independence, but few hard decisions had been made about the future relationship of the Republic of Sudan and the Republic of South Sudan. Omar al-Bashir, and a cadre of his close associates within the National Congress Party, surely believed that they would be rewarded with a peace dividend for their decision to allow the South to progress smoothly towards independence; while, the leaders and people of South Sudan, nestled securely within the warm glow of international applause celebrating the victory of their liberation struggle, undoubtedly believed that the exercise of sovereignty was the first step on a long journey towards a better standard of living and national self-respect. Continue reading

2011: Revolutions, Economic Growth and Political Order

As 2011 comes to a close it is time to reflect on the year. What have we learned about world politics and what still eludes us? Without a doubt the principle dramas of 2011 concerned revolution and political turmoil.  And the unrest unfolding throughout the year has again and again caught even the most sure-footed analysts off balance. While, we all knew that the Mubarak regime had to end, who last January could predict that the regime would crumble so easily and so soon?

Why were we so often wrong and caught off guard? What about the ways in which we see the world has held true and what has been proven false? One way of getting at this problem is to refer back to the questions and assumptions we asked about the revolutions and uprisings of 2011 during the year that has just ended. We have to ask how and why we framed our discussion of the events of 2011 in the ways we did?  Continue reading

Qatar increases its role as a pivotal investor in Sudan

Qatar has signed new trade and investment deals with the Sudanese government in a wide variety of fields. Qatari investors have shown a particular interest in the real estate sector, mineral/mining sectors, agricultural sector and infrastructure construction. Qatari investment in Sudan currently stands at approximately $ 1 billion dollars, but the World Bank estimates that this investment may soon rise to nearly $ 4 billion dollars. Rising Qatari investment will be particularly decisive in the Sudanese manufacturing and agricultural sectors.

ولم يستبعد الطيب ارتفاع حجم الاستثمارات القطرية إلى نحو 4 مليارات دولار أميركي، متوقعا في الوقت ذاته أن تلعب استثمارات قطر دورا محوريا خاصة في قطاعات الزراعة والصناعة

http://www.aljazeera.net/NR/exeres/F2C87B28-1E96-46B8-9B74-49DF6AFD2E45.htm?GoogleStatID=9

The Joys of Secession: The Economic View from Khartoum

It has become common for the foreign policy elite to think of Omar El-Bashir–the dancing dictator– as a fool, idiot or a buffoon. See the video for an illustration of New York Times coverage: http://www.youtube.com/watch?v=6bXb5_WWtCQ

Or just witness the recent references to Omar El-Bashir in Condelezza Rice’s memoirs. In the excerpts released to the press, Secretary Rice says of El-Bashir that, “he looked as though he was on drugs.”[1] When the image of El-Bashir as a buffoon is combined with his status as a fugitive from the International Criminal Court: wanted for war crimes, crimes against humanity and acts of genocide, it becomes easy to dismiss El-Bashir, and by association the ruling NCP, as little more than an incompetent, backwards and irrational ruling junta with no strategic vision–except, perhaps, of the most vindictive and vicious nature, usually directed against its own citizens. (None of this is to argue that the NCP has not committed horrible crimes, usually against its own people, or even that Bashir’s regime has governed well.) Yet, the solidification of caricatures is always dangerous, especially when the caricature itself becomes the explanation.

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